Anger over Oil India favouring Chinese driller

Vol 16, PW 12 (10 Jan 13) People & Policy

Oil India is under fire for blatant bias towards a Chinese rig manufacturer in a tender to buy two 2000-hp onland rigs, where the tender is pending for two years.

Italian rig manufacturer Drillmec wrote to Oil India’s Chief Vigilance Officer Amit Mohan Prasad on January 2 saying that even though its price bid was lowest twice in a row the tender conditions were violated to favour China Petroleum Technology & Development Corporation (CPTDC). Drillmec asks why Oil India entertained unsolicited letters from CPTDC after price bids were submitted, a clear violation of tender terms, which also clearly bar any changes in price after price bids are opened.

Equally puzzling is why India’s Attorney General Goolam Vahanvati recommended on December 14 that Oil India reject Drillmec’s bid without seeking clarifications from the company. Oil India floated the tender in February 2011, receiving bids on May 27 that year from Drillmec, CPTDC, National Oilwell Varco, Lanzhou LS, and state-owned BHEL.

Oil India found Drillmec and CPTDC technically qualified and opened their price bids on March 7, 2012. Drillmec quoted $19m for each rig, CPTDC quoted $21m.

Drillmec should have won but Oil India accepted an unsolicited letter – disallowed under tender conditions - from CPTDC on March 28, 2012, saying it had typed its price wrongly. After referring the case to its Independent External Monitors, Oil India invited fresh bids that were opened on October 3, 2012.

Drillmec quoted $16.94m; CPTDC quoted $17.24m; BHEL quoted $21m. Local Oil India managers found Drillmec’s bid in order and its price the lowest on October 9.

But company management, instead of awarding the contract to Drillmec accepted three unsolicited letters on October 12, 16 and 19 from CPTDC saying Drillmec’s bid should be rejected.